HC restrains Future, upholds Singapore tribunal’s ruling
- The Reliance-Future deal is awaiting clearances from the Supreme Court and the National Company Law Tribunal
Amazon.com Inc. won relief in a see-saw legal battle with Kishore Biyani’s Future Group after the Delhi high court on Thursday ordered Future Retail Ltd not to take any further steps to sell its assets to Mukesh Ambani’s Reliance Industries Ltd.
The single-judge bench of Justice J.R. Midha ruled that Future Retail has “wilfully violated Singapore International Arbitration Centre’s (SIAC’s) emergency order”, holding that the tribunal’s ruling is legally enforceable in India under the country’s arbitration law.
On October 25, SIAC restrained Future Retail from taking steps to complete the deal with Ambani’s companies. Amazon had challenged Future Group’s ₹24,713 crore asset sale to Reliance Industries on the grounds that it violated a contract that a Future Group unit had entered with Amazon for an investment in a group firm.
According to the August 2019 agreement between Amazon and Future Group, the Indian group can’t sell its retail assets to 30 entities, including Reliance Industries, without Amazon’s prior consent.
On Thursday, the court also ordered the attachment of all properties of Kishore Biyani and directors of Future Group firms.
The high court also directed Future Group and its directors to deposit ₹20 lakh in the Prime Minister’s Relief Fund to provide covid-19 vaccines to the elderly poor.
The high court has ordered that a show cause notice be served on Future Group seeking an explanation as to why its founder, Kishore Biyani, and other directors not be kept in civil detention for three months for deliberately violating the emergency arbitrator’s order.
Spokespeople for Future Group and Amazon declined to comment.
On Wednesday, Mint reported that Future Group has asked SIAC to remove Future Retail from the scope of its order that temporarily blocked the Biyani-led group from selling its assets to Reliance. In the modification application, Future Group has asked SIAC to review its October ruling.
The application follows the Delhi high court and the Supreme Court upholding the validity of the arbitration court’s order.
The cash-strapped Future Group is trying to expedite the deal with Reliance to pay creditors and save the Big Bazaar retail chain from collapse.
The real battle is, however, between Amazon and Reliance over a bigger slice of the Indian retail market that is estimated to exceed $1.3 trillion by 2025. Amazon fears that access to assets of Future Retail will give rival Reliance Retail an edge in the battle for dominance of the Indian market.
Future Group, which has been caught in the battle between Amazon and Reliance, has been struggling to repay around $3 billion worth of dues to lenders.
The Reliance-Future deal is awaiting clearances from the Supreme Court and the National Company Law Tribunal (NCLT).
But even as the legal clearances are awaited, Reliance has extended operational support to Future Retail to prevent a deterioration in asset quality. Reliance has also extended an internal deadline for the completion of the purchase by six months to accommodate for delays caused by the legal battle.
On February 8, a division bench of Delhi high court stayed Justice Midha’s February 2 interim order directing Future Retail to maintain status quo on the deal with Reliance Industries.
The bench had said that it was staying the single judge order as Future Retail was not a party to the share subscription agreement between Amazon and Future Coupons Pvt. Ltd and the US e-commerce giant was not a party to the deal between Future and Reliance.
Justice Midha on Thursday said that by virtue of doctrine of group of companies, even Future Coupons is a proper party to the arbitration proceedings and the emergency arbitrator has rightly invoked the Group of Companies doctrine by applying the well-settled principles laid down by the Supreme Court.